OCC Beefs Up Stress Tests to Shield Against Market Turmoil
Published Date: 6/27/2025
Notice
Summary
The Options Clearing Corporation (OCC) is updating how it tests for financial risks and manages its safety fund to better handle tough market situations. These changes affect traders and firms using OCC’s services by making the system stronger and safer. The updates are set to roll out soon, helping protect everyone from big money losses during market stress.
Analyzed Economic Effects
3 provisions identified: 1 benefits, 2 costs, 0 mixed.
Six Scenarios May Trigger More Collateral
If you are a firm or trader that clears through OCC, six scenarios that were previously informational would be recategorized as Sufficiency Scenarios and would be used to determine potential calls for additional collateral (for example, margin collateral or an intra-month resizing of the Clearing Fund). OCC says these include four sector-specific hypothetical scenarios and two 2020 Largest Rally/Decline variations.
Clearing Fund May Be Sized To Bigger Events
OCC would change its Methodology Description to highlight that the Clearing Fund can be sized using a scenario that exceeds a 1-in-80 year event (for example, a 1-in-90 year event) if the Stress Testing Working Group, Management Committee, and Risk Committee determine it is necessary; this could lead to a larger Clearing Fund and larger member contributions if such a decision is made.
Eight Historical Scenarios Removed From Calls
OCC would recategorize eight historical Sufficiency Scenarios (spanning events from 1974 to 2008) as Informational Scenarios, so those eight scenarios would no longer be used to determine potential calls for additional collateral or affect the amount of resources collected from members.
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